IRS notice
IRS Letter LT16: Unpaid Taxes or Missing Returns
The IRS is trying to collect a balance, get returns it believes you haven't filed, or both.
Reply by the date on the notice
Respond by the date on the letter; missing returns should be filed as soon as possible, and interest and penalties continue until any balance is paid in full.
An LT16 means the IRS is trying to collect unpaid taxes from you, or its records show one or more required returns haven't been filed, or both. Read which years it lists, file any missing returns, and pay the balance or request a payment plan; if you think the letter is wrong, call the number on it.
What this notice is telling you
- The letter can be about a balance due, unfiled returns, or both. The letter lists which tax years and which issue applies to each.
- For balances, it tells you how much you owe, when it is due and how to pay.
- For missing returns, it names the years the IRS expects a return from you.
- If you paid in full within the last 21 days, the IRS says you can disregard the LT16, since payments can take that long to post.
- Ignoring it can lead to enforcement such as a levy on wages or assets, or a federal tax lien.
What to do
Sort the letter into its two parts
List the years with a balance and the years marked as unfiled. They are handled differently, and a letter about missing returns does not mean you owe tax for those years.
Check whether you had to file
If you believe you weren't required to file for a listed year, use the IRS's Do I need to file? tool. If it says no but the letter says yes, call the number on the letter.
File the missing returns
Prepare and file each listed return as soon as possible. If you already filed one and more than 10 weeks have passed, the IRS asks you to send a signed copy again.
Pay the balance or arrange a plan
Pay online in full, or pay what you can and request an installment agreement. You must be current on filing to qualify. Individuals who owe $50,000 or less may qualify for the Simple Payment Plan; otherwise call or mail Form 9465.
Keep an existing plan going
If you already have an approved installment agreement, keep making the payments. If a plan is pending, pay as much as you can in the meantime.
Why unfiled years and balances often arrive together
The IRS will not approve an installment agreement while required returns are missing, so an LT16 that lists both issues is usually telling you the order of work: get the returns in, then settle what is owed. Filing can also change the balance. A year the IRS thinks is unfiled might show a refund once the return is prepared, and the IRS notes you may still need to file even when you are due one. A refund is generally available only if the late return is filed within three years of its original due date, so older refund years may be lost even though the return is still required.
| Situation on the letter | What to do |
|---|---|
| Balance due only | Pay in full or request a payment plan; call if the amount is wrong. |
| Unfiled return only | File the return, or call if you weren't required to file or already filed. |
| Both | File first, then pay or set up a plan covering all years. |
| Return already filed but listed as missing | If more than 10 weeks have passed, send a signed copy again; call if it was reported incorrectly. |
If you can't pay at all
If you cannot pay any of the debt, the IRS may place the account in currently not collectible status, which temporarily delays collection. It is not forgiveness: penalties and interest still accrue, and you will need to show income, expenses and assets. An offer in compromise may settle the debt for less in some situations, and the IRS's Pre-Qualifier Tool gives a first read on eligibility. If you believe the tax is wrong or can't resolve a disagreement, you are entitled to a hearing with the Independent Office of Appeals; Publication 1660 explains the process.
What happens if you wait
The IRS says inaction can lead to seizure of wages or assets and a federal tax lien that can affect your credit and ability to borrow, and interest and penalties keep accruing until the balance is paid. Before most levies the IRS must send a final notice of intent to levy, such as an LT11, which carries a strict hearing deadline. It is much easier to file and set up a plan now than to do it under a levy notice.
Where this notice sits
The usual order. Not every account gets every notice, and some steps can be skipped.
Want a CPA to deal with it?
Bring the notice to a free consultation, in person on James Island or by video. We read it with you, tell you what it means for your account and, if you want us to, take over the response once you sign Form 2848.
Unfiled tax returns — Missed one year or several? We find out what the IRS already has, prepare the missing federal and South Carolina returns, and sort out the balance after they are filed.
By Haigler CPA Group. Updated . Notices are revised from time to time, so go by the wording and dates on your own notice. The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
Questions about LT16
My LT16 lists a year I'm sure I filed. What should I do?
If more than 10 weeks have passed since you sent it, mail a signed copy of that return. If the IRS has it but recorded it incorrectly, call the number on the letter to have it fixed.
I paid last week. Why did I get an LT16?
Payments can take up to 21 days to post. If you paid the balance in full within the last 21 days, the IRS says you can disregard the letter.
Do I have to file for a year in which I'm owed money back?
You may still be required to file. The IRS notes this on its LT16 page, and filing is the only way to claim a refund that is still within the time limit.
My letter lists missing returns but no balance. Do I owe money?
Not necessarily. A missing-return letter means the IRS expects a return, not that it has calculated tax. Once the return is filed, it may show a balance, no balance or a refund. If you weren't required to file, call the number on the letter.
Other notices
- CP59: No record of your prior-year returnThe IRS has no record of your prior-year personal return and asks you to file it or explain why you don't need to.
- CP518: Final reminder: return not on fileThe IRS's final reminder that it has no record of your prior-year return; ignoring it can lead the IRS to figure your tax for you.
- CP504: Notice of intent to levyThe IRS's notice of intent to levy: your state refund can be taken after 30 days, and stronger collection steps can follow.
- IRS notice lookupEvery IRS notice carries a code. Find yours below to see what it generally means, which date matters, and what to do before that date passes.
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